Regional QLD September 2017

The month in review: Regional QLD

By Herron Todd White
September 2017

Toowoomba

The Toowoomba and surrounding residential property market remains steady at present with low sales volumes wide spread across all sectors.

Being one of the more affordable regional locations in Australia, Toowoomba and surrounding suburbs offer an opportunity for many different types of home owners. With various industry and job opportunities, a central hub location, a diverse property market and varying segments, there are many different home owners whether first home owners, families, or empty nesters. While lending has tightened and property ownership has become more difficult for the next generation, there are still good opportunities in the Toowoomba region to become a home owner. Strategies such as joint ownership can also bring affordability to young people getting their foot in the ownership door and out of the rental market.

The typical product attractive to first home buyers tends to be in the sub $450,000 segment, being new 2- and 3-bedroom units as well as 3- and 4-bedroom houses located in active investor areas in the western suburbs of Toowoomba and satellite suburbs such as Cambooya and Wyreema. The other trending option is to buy older housing in more established areas. Families generally seek slightly different properties to first home buyers, with a focus on more space (i.e. 4-bedroom houses), bigger back yards and close proximity to schools. This type of housing is found throughout Toowoomba, Highfields and Westbrook in the sub $600,000 segment. Empty nesters seem to stay put in the family home or down-size to unit or villa living and seem to fill the higher priced property segment.

Attached housing and detached housing on small lots are tending to grow in popularity throughout the Toowoomba area, particularly in the older areas close to the CBD. The dream of having a big back yard appears to be changing. Many infill blocks have been sub-divided into smaller lots or have had unit complexes built on them. This type of product may be attractive to empty nesters looking to downsize for maintenance and convenience reasons. Attached housing is also becoming more appealing to first home buyers for affordability. This product is often more suited to home buyers than investors due to costs for the location and resulting returns on capital.

The sector in the home buyer’s market which appears to be most active is upgraders looking to get into a bigger house or a more desirable location. Properties in areas such as Rangeville, Middle Ridge, East Toowoomba and Mount Lofty seem to be what is sought after by this sector.

Sunshine Coast

Home ownership is still the dream for most people living on the Sunshine Coast and owner-occupiers are again making up the majority of sales, particularly since APRA announced changes to investor lending.

We are seeing first home buyers still very active throughout the more affordable hinterland townships as well as in the new small lot residential estates at Caloundra and Palmview. Land in these estates is selling before titles are issued and is very popular amongst first home buyers. The Sunshine Coast is seeing some change with several new high density unit developments recently completed around the new hospital precinct and a large supply of small lot developments providing affordable housing. Lot sizes above 500 square metres are becoming scarce along the coastal strip and the number of attached housing developments is increasing. Both of these residential options provide an opportunity for first home buyers to get into the market at around $400,000. Investors are also active for these types of properties at this price point.

Upgraders are also active given the ability to exit out of their current home. Also the Sunshine Coast has always been a popular destination for retirees seeking the sea change. This group of buyers makes up the majority of the market for the better family homes along the coast and rural residential properties inland. Upgraders are more active in the $600,000 to $1,000,000 price range, with the main reasons being the want of a larger dwelling or a property in a more desirable location. This price range will still secure good quality properties right up and down the coast, from units with views to a family home within walking distance of the beach and are still considered affordable in comparison to Sydney and Melbourne.

The prestige market is dominated by upgraders and retirees with a fair chunk of buyers coming from Brisbane and the southern states. These buyers make up the majority of million dollar plus residential sales on the coast. Whilst some well located good quality units sell in this price range, the majority of million dollar plus sales are beachside and canal front dwellings or larger hinterland properties, many of which afford views.

The residential market in general is still moving along nicely. Vacant land is still very popular and most agents are reporting difficulties in securing listings at present. Anecdotally we hear that owners are reluctant to sell at the moment as they are anticipating that there will be a further improvement in future capital growth. First home buyers, upgraders and retirees are active in the market which is unlikely to change given we live in a great part of Australia. The great Australian dream of home ownership is still alive and well on the Sunshine Coast.

Hervey Bay

Hervey Bay has traditionally been an owner-occupied market generally due to its beachside location and affordability. The boom period of 2006 to 2008 saw investors take advantage of cheap property compared to their local southern markets however some of these initial investors are now local residents. There are many different housing options for home owners including villas, townhouses and units close to the foreshore, existing detached housing or vacant land with a view to building their new home. Land generally starts from around $150,000, established older housing ranges from $250,000 to $450,000 up to esplanade and beach front property in excess of $750,000. New turn key house and land packages generally offering 4-bedroom, 2-bathroom accommodation with a double garage ranges from $375,000 to $500,000 depending on the estate. Land sizes also vary considerably from the older, traditional 800 square metre to quarter acre block down to 400 square metres in some of the new estates. Some acre or larger lots are still available however zoning changes have seen quite a lot of these larger blocks now being subdivided. First home owners were active over the past two years however this now appears to have slowed as a consequence of local government incentives no longer being offered or offered at a reduced level. Appetite for homes requiring renovation is improving with older beach shack property being prime targets due to location.

The rental market has also been strong for a number of years now with a 4-bedroom home receiving $360 to $400 per week. This return has maintained an investor presence in our market. Most investor activity is however in the new estates which also has tax benefits for new homes. Generally Hervey Bay has a balanced market between investors and owneroccupiers with an adequate supply of all property types for a potential home owner.

Bundaberg

The Bundaberg home owner comes in many forms, with first home owners, upgraders, families and empty nesters all being relatively active within the Bundaberg residential markets. The most active localities are the coastal corridor around Bargara and the suburbs surrounding the city. Recently buyers have had a preference for established houses with the volume of sales having a slight increase at the expense of vacant land and unit transactions. Due to the relatively affordable level of housing throughout the region, Bundaberg remains attractive to all types of home owners.

Emerald

Home owners make up approximately 95% to 99% of the current market. They are active in all price ranges from $200,000 to $600,000. There is a quiet confidence starting to filter around the town that the resource sector has stabilised and employment demand appears to be trending upwards slightly. If coal prices remain where they are or improve we will only see the employment demand increase. Purchasers appear to have more confidence in the market being stable or perhaps firming over the next two years. Those moving to town for work think our house prices are good buying (compared to the east coast and south east corner). Renters have been active in purchasing homes and some are choosing to upgrade. Good value for money is across all types of properties. Many in town purchased during the boom period of 2005 to 2012 and now owe more than their property is currently worth. Had they still had equity or could sell and break even the upgrade market and local investor market would currently be very active.

Gladstone

The landscape of the Gladstone property market has changed dramatically in five short years. During the boom, the market was dominated by investors trying to cash in on the hype that surrounded Gladstone.

Value levels and rents were the highest Gladstone had ever seen, vacancy rates were essentially 0%, motels were running at 150% occupancy, etc etc. They were crazy times!

Fast forward five years and the property market could not be more different! You would be hard pressed to find a property owner who has not suffered some sort of loss in the past few years. On the other hand, the buyer’s market we currently find ourselves in has attracted many different types of home owners to the market. The affordability of property in Gladstone has turned us from one of the most expensive places to live in the state to one of the cheapest. Value levels have not been this low for nearly two decades.

We have seen a large contingent of first home owners enter the market. First home buyers appear more active in the sub $400,000 market for both existing and newly constructed homes, however if purchasing existing homes they are generally looking to buy at a lower price point. Upgraders are also taking advantage of the current affordability. These buyers are typically looking for detached housing with space for the children, both internally and externally. Proximity to infrastructure such as schools and shopping play an important role in these buyers’ decisions.

Investors have slowly been starting to re-enter the market over the past few months. While the properties being purchased vary, most are looking for long term capital gains as the rental yields are likely to remain very low for a while yet.

Overall, the dream of home ownership in Gladstone is definitely easier and within reach for many more aspiring home owners.

Rockhampton

The great Australian dream is an ever changing ideal for many Australians and in Rockhampton it is no different. There are many different housing options which a potential home owner can purchase, including inner city apartments, existing detached housing or vacant land with a view to building their new home. For each of these options, there are various price points ranging from $100,000 to in excess of $750,000. First home buyers appear more active in the sub $450,000 market for both existing and newly constructed homes, however if purchasing existing homes they are generally looking to buy at a lower price point. Second plus home owners are typically upsizing or upgrading and their budgets vary depending on their desired location, house size and quality. Second plus home owners generally have families and are looking for detached housing with space for the children, both internally and externally. Proximity to amenities such as schools and shopping play a particular role in an upgrader’s decision. The retirees of the area have in the past typically migrated to the nearby coastal towns of Yeppoon and Emu Park, however over the preceding years, there has been an increase in the number of inner city high-rise residential towers which provide a great lifestyle for those looking to downsize and reducing property maintenance which has proved popular.

Home buyers are the most prevalent buyer in the current market, with limited appetite from investors. Overall a consistent theme from first home buyers to upgraders and retirees is that there appears to be an overwhelming preference for better maintained and presented properties that require minimal, if any work. With a large number of properties on the market, buyers are discerning in what they are buying, however the right property at the right price will still attract plenty of interest from potential home owners. The major difference between home owners and investors would be that home owners are more concerned with location, price point and quality compared to investors who are focused on maximising returns. The dream may be changing, but it is still well and truly alive in Rockhampton.

Mackay

This month we discuss home ownership and its different forms within our markets. It’s such a broad topic that got us thinking about how the Mackay residential market and home ownership possibilities have changed over say the past three to five years. Prior to 2013, Mackay had one of the highest median house values in regional Queensland sitting around the $430,000 mark in 2012 and one of the major issues facing the market was affordability. Mackay had a reputation as a mining town and was often not on the radar for professions such as teachers, police, ambulance or entry level job seekers not related to mining because of the high rents and purchase price for dwellings. Even in our own business we found it extremely difficult to move our trainees to Mackay because of the high costs associated with housing.

However, since the downturn in the resource industry and flow on effects to the Mackay residential market, we saw significant falls in both house prices and rental levels across the board. This downward cycle lasted well into 2016 and saw median house prices drop by over $100,000 to sit at around the $315,000 mark, with many properties available for under and in some cases well under $300,000. While this result was has been difficult to take, it has presented opportunities in Mackay not seen in over 13 years. The issue of affordability and the ability to move nonmining related staff and employees into the region has become easier. For example, we had an assistant valuer move to Mackay in 2012 to further her training and she was paying $375 per week rent for a small 2-bedroom walk up flat with poor quality fitout, with virtually no prospects of being able to purchase. This level of rent was unsustainable and she moved south to further her training. Since the downturn, we have been able to transfer one of our junior valuers to Mackay who now rents a 3-bedroom dwelling in Beaconsfield for $250 per week and is on the hunt to purchase a dwelling. I imagine this scenario is being played out across a variety of industries in Mackay.

This new level of affordability isn’t just rewarding the lower end of the market. We have seen this across most sectors of the market from first home owners to middle level upgraders, even to the top end prestige market. For example, in the boom to purchase good quality executive dwellings in the newer estates such as Northview Gardens, you were looking at the $600,000 plus. This may have been out of the reach of some purchasers. Since the market has fallen, we have seen a number of sales within the estate at between $450,000 and $500,000, which when combined with record low interest rates becomes more achievable.

Overall, the dream of home ownership in Mackay has become that much easier!

Whitsunday

Here in the Whitsundays it appears that we are just starting to bounce back since Tropical Cyclone Debbie hit us with all her force and more!

At present there appears to be movement in the land sales area with new home buyers and upgraders jumping in and looking to build their dream home. The only problem is that there is a limited number of tradies and lots of them are working on the insurance work caused by the cyclone.

There are still so many people waiting for repairs to their homes to commence and homes being sold in their present state with the owners signing over the insurance claim to the incoming purchaser.

It is far from the normal here in the Whitsundays but it is bouncing back. There are still some southern investors entering the market but these appear to have slowed.

The rental market has moved as you can imagine with the additional tradies here to complete the insurance work and the locals not able to live in their houses while repairs take place pushing the rental market.

Townsville

Activity in Townsville’s residential property market is currently dominated by owner-occupiers with a number of these buyers being first time participants in our local market.

Sentiment is building in Townsville’s residential property market which is consolidating at the start of recovery phase, although the market is showing a dichotomy with the recovery in the housing sector advancing, whilst the market for land and units continues to teeter.

First time participants in the local market are buying houses across most suburbs of Townsville and include a mixture of new, semi modern and older style homes. This sector of the market would appear to be mostly active in the $300,000 to $400,000 range.

Other owner-occupiers include upgraders moving from units to houses, renovators, those moving to superior locations and downsizers. This market encompasses a wide range of values and suburbs.

Townsville’s median house price remains soft and it would appear that first time participants in the market have realised that now is the time to buy with record low interest rates, good affordability and a buyer’s market creating favourable conditions for these buyers.

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